Special Service and Features
Report of the Comptroller and Auditor General of India on UDAY - Performance of Tamil Nadu Generation and Distribution Corporation Limited during pre and post Ujwal DISCOM Assurance Yojana&General Purpose Financial Report for the year ended 31 March 2020
1) Report of the Comptroller and Auditor General of India for the year ended 31 March 2020 – Performance of Tamil Nadu Generation and Distribution Corporation Limited during pre and post Ujwal DISCOM Assurance Yojana- Government of Tamil Nadu - Report No.7 of 2021 – Tabled in the Tamil Nadu Legislative Assembly on 10.05.2022.
Introduction
With the objective of improving the health of state-owned Electricity distribution Companies , the Ministry of Power, Government of India  launched the Ujwal DISCOM Assurance Yojana  Scheme . It envisaged reforms for realising affordable and accessible 24x7 Power for All through financial turnaround and improving operational efficiency of the DISCOMs. A tripartite Memorandum of Understanding  was signed  amongst GoI, GoTN and TANGEDCO specifying the responsibilities of the respective parties for achieving the operational and financial milestones.
This Performance Audit was taken up to assess the performance of TANGEDCO for achieving financial turnaround as well as the targeted operational improvement and intended outcomes envisaged in the tripartite MoU and the Scheme.
Financial Management
- GoTN, against its obligation to take over 75 per cent of the debt, had agreed to take over only 34.38 per cent consequently, TANGEDCO was saddled with a loan of ₹30,502 crore, which resulted in additional interest burden of ₹9,150.60 crore.
- In respect of the remaining 25 per cent debt i.e., `7,605 crore, TANGEDCO was required to issue State Government guaranteed bonds with lesser interest. This was not agreed by GoTN. Consequently, the loans carrying higher rate of interest were continuedresulting in additional interest burden of `1,003.86 crore.
- Due to partial takeover of debt, failure to convert 25 per cent debt into bonds and the increase in borrowings for generation project by 87.05 per cent and working capital by 189.88 per cent during five years ending 2019-20, the outstanding debts increased from ₹81,312 crore  to `1,23,895.68 crore at the end of 2019-20.
- TANGEDCO had to pay ₹503.28 crore to Banks/FIs as overdue and penal interest.
Implementation
- The gap between the Average Cost of Supply  and Average Revenue Realised  should have been brought to zero by 2018-19. Instead, it increased from ₹0.60  to ₹1.07 per unit  and the total the total shortfall during 2015-20 worked out to ₹42,484.70 crore.
- TNERC had directed TANGEDCO to complete the process of providing meters to all the Hut and Agricultural consumers by June 2012 and September 2012 respectively. However, TANGEDCO failed to complete the same and claimed subsidy based on number of service connections and HorsePower basis respectively resulting in loss of revenue of ₹1,541.49 crore.
- The principle of Merit Order Despatch was not scrupulously followed in scheduling of power by State Load Despatch Centre resulting in procurement of power at additional expenditure of ₹28.45 crore during 2018-20.
- Non-renewal of Power Purchase Agreement at the TNERC approved rate of ₹3.50 resulted in additional expenditure of ₹149.02 crore.
- There was under reporting of AT&C loss in the range of 2.24 to 3.41 per cent during 2015-20. The value of energy lost as per CEA’s method of calculation was ₹6,547.25 crore.
Recommendations
- Audit recommends that GoTN and TANGEDCO may review and restructure the debts to reduce the interest cost, submit tariff petitions to TNERC regularly, calculate the AT&C losses accurately as per the methodology prescribed by CEA to have better control over it.
- TANGEDCO may work out plan of action for feeder segregation with a focus to reduce the AT&C loss.
2)Report of the Comptroller and Auditor General of India on General Purpose Financial Report for the year ended 31March 2020  – Government of Tamil Nadu - Report No.5 of 2021 – Tabled in the Tamil Nadu Legislative Assembly on 10.05.2022.
This Report contains the overview of financial performance, oversight role of CAG, Corporate Governance and Corporate Social Responsibilityof Public Sector Undertakings  of Government of Tamil Nadu  under four chapters. The audit findings under each chapter have been included in the respective chapters.
I Financial performance of State public Sector Undertakings
This Report deals with 72 PSUs comprising 62 Government Companies, one Statutory Corporation and nine Government Controlled Other Companies. The accounts of five PSUs which were defunct/under liquidation are not covered in this Report.
Investment by State Government
- Accounts of 63 Government Companies and Corporation indicated that the GoTNhad an investment of `36,877.29crore in share capital and loans given by GoTN amounted to `16,903.54 crore.
- Compared to the previous year, investment by GoTN in equity of PSUs registered a net increase of `3,059.89 crore and loans outstanding decreased by `2,914.70 crore.
Market Capitalisation
- The total market value of shares of one listed Government controlled other Companystood at `615.28 croreand market value of shares held by the GoTN stood at `217.27 crore.
Return from Government Companies and Corporation
- 27 Government Companies and Corporation earned a profit of `1,205.56 crore of which `1,011.95 crore was contributed by five Government Companies in three sectors viz. Power, Industries and Micro, Small and Medium Enterprises.
- 14 Government Companies and Corporation declared dividend of `140.91 crore.
- Non-compliance with directives of GoTN on declaration of dividend by 17 PSUs resulted in a shortfall of `220.65 crore.
- 31 PSUs incurred losses amounting to `18,629.83 crore.
Net worth/ Accumulated losses
- There were 26 Government Companies with accumulated losses of `1,41,157.46crore. The net worth of 18 companies had been completely eroded by their accumulated losses. As a result, the aggregate net worth of these companies had become negative to the extent of `1,08,863.78crore. All the 18 PSUs whose capital had been eroded had reported loss of `18,458.17 crore.
Rate of Real ReturnonGovernment investment
- The present value of Government investment was `1,03,754.62crore as compared to the historical cost of investment of `3,83,375.28 crore.
II Oversight role of CAG
- Out of 77 PSUs , financial statements for the year 2019-20 were received from 64 PSUs. The financial statement of 13 PSUs were in arrears due to different reasons.
- Out of the 64 PSUs from which financial statements for the year 2019-20 was received, supplementary Audit was undertaken in 46 PSUs.
- The financial impact of significant comments issued by CAG on the profitability was `1,933.39 crore and on assets/liabilities was `1,370.57 crore.
- Deviations from the provisions of AccountingStandards/Ind AS in preparation of the financial statements were noticed in 13 companies by the statutory auditors.
III Corporate Governance
- Ten PSUs did not conduct the mandatory requirement of four meetings of the Board of Directors during the year.
- Representation of Independent directors was below the required number in seven PSUs. There was no women director on the Board of Directors of three PSUs.
- Some of the Independent Directors did not attend even 75 per cent of the Board meetings in 19 PSUs and Board committee meetings in 11 PSUs.
- In 20 PSUs, separate meeting of Independent Directors was not conducted and in one PSU, the Independent Directors did not attend the separate meetings.
- Audit Committee was not constituted in six PSUs.
- Nomination and Remuneration Committee was not constituted by 28 PSUs and there was no whistle blower mechanism in 15 PSUs.
IV Corporate Social Responsibility 
- There was under allocation of funds towards CSR by one PSU, viz., Tamil Nadu Warehousing Corporation.
- Total spend on CSR activities by 13 PSUs in 2019-20 was `12.27 crore. Highest spend was by Industries Sector which spent a maximum amount of `8.66 crore.
- One PSU viz., Tamil Nadu Small Industries Corporation Limited credited the provision made for CSR activity  as business profit during 2019-20.
- Under CSR Expenditure, Education  received the maximum focus followed by Health .
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